Estate Planning: Should You Create A Trust?

lastwill3.jpg

Trusts help define how and when you want your assets distributed after your death and can often reduce your estate taxes and the cost of probate court.

You may think trust funds are only for the wealthy, but a trust can be a useful tool for many when planning your estate. Trusts let you put conditions on how and when your funds will be disbursed after your death and can often offer a number of benefits for your heirs.

When a trust might make sense for you

Even if you already have a will, a trust can offer greater protection of your assets from lawsuits, reduce your estate taxes and can sometimes reduce the delay and cost of probate court.

A trust might be right for you if your assets are worth at least $100,000, and you:

  • have a sizable amount of assets in real estate, a business or an art collection, or
  • want to put conditions on how your assets are distributed to your heirs (such as graduating college), or
  • want to maximize your estate tax exemptions, or
  • want to set up a trust to pass on to your children after your spouse dies.

Types of trusts

There are a number of different types of trusts you can choose from depending on your goals. A living trust is one in which you put the majority of your assets, and is likely all that you need unless your net worth exceeds $2 million. A living trust enables your property to avoid probate and quickly pass on to your beneficiaries. If you have a living trust, you will also need a “pour-over” will, which directs any assets not included in the trust at the time of your death to be included.

The other standard forms of trusts include credit shelter trusts, generation-skipping trusts, qualified personal residence trusts, irrevocable life insurance trusts and qualified terminable interest property trusts. Click here for information on these types of trusts.

How to create a trust

lastwill2.jpg

Trusts can be complex—each type of trust offers certain advantages and disadvantages. If you’re willing to take the time to do some research, and your situation isn’t too complex, then you can create a living trust yourself. If, however, your situation is complex, it’s probably best to talk with an estate planning attorney. This can cost up to $3,000 or more, depending on the complexity of your trust.

To make a basic living trust, you’ll need to create a Declaration of Trust in which you name yourself as trustee—meaning that you are in charge of the trust property. You then transfer ownership of the property you want included in your trust to yourself. Essentially, you are retitling to the name of the trust any property you want included in the trust.

In the Declaration of Trust, you’ll also want to name those you wish to inherit property from the trust after your death, as well as the person you want to manage your trust. This person, called the successor trustee, transfers ownership of the trust property after your death to those you named in your trust, eliminating the need for probate court.

Visit nolo.com for more estate planning information.

This article contains general information. Individual financial situations are unique; please, consult your financial advisor or attorney before utilizing any of the information contained in this article.

Source: CNNMoney.com, nolo.com
Search All Articles
Related Articles
No Child Left Behind Increases Parents' Choices
Nclb_thHow No Child Left Behind provides educational choices
No Child Left Behind and Charter Schools
Apple_thHow Charter Schools work with the No Child Left Behind law
No Child Left Behind and School Safety
Books_thWhy No School Left Behind will make schools safer and more drug-free
Are You Ready for Earthquakes?
Areyouready_030_thHow to be better prepared in an Earthquake

More...
Most Popular
Staging Your Home For Sale: Top Five Tips
StagingsmLearn the top five things to do when staging your home for sale.
5 Things to look for in a local school
Safety_harbor_middle_schoolAs the parent or guardian of your child, ensure that they are getting the best education that they can.
First Time Home Buyer Programs - California
Houseredroof120The California Housing Finance Agency helps low-income families with programs for first-time homebuyers.
Glossary of HOA Terms
ImageGlossary of terms used in homeowner association documents

More...

Zip Code Profiler

Neighborhoods, Home Values, Schools, City & State Data, Sex Offender Lists, more.

Instant Home Value!